Wholesale prices rose in October, although they were largely in line with expectations and largely in line with the Federal Reserve's renewed interest rate cut in December, the Bureau of Labor Statistics reported Thursday.
The producer price index, which measures what producers receive for their products, rose a seasonally adjusted 0.2% for the month, up a tenth of a percentage point from September but in line with the Dow Jones consensus forecast. On a 12-month basis, headline wholesale inflation was 2.4%.
Excluding food and energy, core PPI rose 0.3%, also a tenth higher than in September and also in line with expectations. The 12-month rate was 3.1%.
Although the readings are above the Fed's inflation target of 2%, the trend shows that price increases are generally moderating and inflation is being driven by isolated factors.
Services rose 0.3% month-on-month, accounting for most of the PPI increase, and was largely driven by a 3.6% rise in portfolio management prices. Food prices fell 0.2% month-on-month, while energy prices fell 0.3%. Goods prices rose 0.1% after falling in the previous two months.
Markets had little reaction to the news as stock futures pointed to a mixed open while Treasury yields remained higher.
Traders expect the Fed to follow up on rate cuts in September and November with another quarter-percentage point cut at the Dec. 17-18 meeting. After that, market prices suggest the Fed will skip January and move at a slower pace of easing through 2025.
The market's implied probability of a December rate cut fell to 76.1% after the release, a range that still indicates high probability, according to CME Group's FedWatch index of futures prices.
In other economic news, the Labor Department reported Thursday that the pace of layoffs continued to ease after a brief spike.
A total of 217,000 initial jobless claims were filed in the week ending Nov. 9, down 4,000 from the previous period and slightly below the estimate of 220,000.
Current claims, which are a week behind, totaled 1.873 million, down 11,000 from the previous week.
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